Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Paper, Rock, Silver

Commodities / Gold and Silver 2013 Jun 28, 2013 - 03:12 PM GMT

By: Dr_Jeff_Lewis

Commodities

The silver market has taken a nose dive in recent trading sessions, leaving many of those positioned on the long side underwater. 

Taking a deep breath, it may be time to acknowledge the difference between physical and paper


The Problems With Paper

Put simply, paper derivatives do not price in fundamentals. Nevertheless, price movements in paper products are shaping sentiment, and are moving the precious metals far off the radar screen as an attractive investment — except perhaps for the very few that see their intrinsic value.

All paper derivatives markets have ballooned so far from reality, that along with the rapidly expanding money supply, they seem to be gigantic bubbles in and among themselves.

Furthermore, the latest silver market rout indirectly serves to support the metal’s price in the long term by forcing numerous suppliers out of the market, as their production becomes increasingly uneconomic.
 
Given Falling Silver Prices — Consider the Alternatives

Those considering moving their investment funds out of the paper silver market into other assets, are probably now looking at the available alternatives. Here is a quick overview:

  • Bonds - Most individuals will not be able to leverage enough to short bonds.
  • Equities - The recent stock market rally from its 2009 lows could disappear swiftly, and in the end, you will be left holding a paper certificate tied to management that is both dependent on and held inside a troubled financial system.
  • Housing - The much touted non-recovery is finally manifesting itself via rising mortgage rates. The sad truth regarding pent up foreclosure-based shadow inventory will reveal itself soon.
  • Farmland - Even farmland has been over bid and is expensive historically speaking.
  • Forex - Getting involved in trading currency markets means ultimately chasing one piece of paper versus another, as all fiat currencies have become.
  • Holding Physical - The irony of physical demand for precious metals is that despite the recent decline in price, a surge in physical demand is occurring.

The Ultimate Confiscation

In many ways, paper metal derivatives represent a type of front line, underhanded confiscation since people are duped into holding them instead of the actual metals that their prices are supposedly based on.

After this, the sequence of a more overt confiscation policy looks like it will go after:

  • Derivatives
  • Paper metal certificates
  • Electronic metal balances

Furthermore, the Cyprus bail-in banking debacle looks like the template for future deposit confiscations. 

With respect to pensions and 401k plans, the coming market volatility will probably 'convince' the masses that the government knows better. Sadly, the 'government guarantee' seems to be the sacred cow that will be sacrificed to bring about the great “financialization” of everything.

Making paper currency legal tender was the first step in this process, and the ensuing propaganda campaign has effectively steered a generation away from sound money principles.  Only by seeking real value can investors see the benefits in continuing to hold silver.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2013 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in